The financial manager at Kyser Jones is considering two mutually exclusive projects with the following projected cash flows:
|
Projected Cash Flows
|
|
Year
|
Project M
|
Project Z
|
|
0
|
-$60,000
|
-$60,000
|
|
1
|
22,500
|
0
|
|
2
|
22,500
|
0
|
|
3
|
22,500
|
0
|
|
4
|
22,500
|
111,000
|
If Kyser Jones’ required rate of return is 11%, which project would be chosen and why?